The long term goal of the proposed research is to shed light on the efficacy of public policies aimed at preventing alcohol problems or at minimizing their harmful effects. The proximate objective is to develop, with the help of economic theory and econometric methods, quantitative estimates of the effects of specific policies on absolute alcohol consumption in a given population. Building on ordinary economic demand theory and using pooled cross-section and time series data, the study sets out to estimate elasticities of substitution among alcoholic beverages for changes in tax rates and relative prices. Using a consistent expenditure system, the study examines the demand for alcohol in relation to other items in the individual's budget. Then, drawing on the implications of the Ledermann theory of alcohol use, the study aims to develop models to explore the dynamics of alcohol consumption and the process of habit formation. Finally, a Lancaster-type model using beverage characteristics is proposed for the analysis of the consumption effects of changes in regulated beverage proofs and in terms of sale. The proposed study region is Scandinavia, chosen for its unique data base and for its long experience under a variety of alcohol policy regimes.